I think it is underappreciated by many technologists how many technology companies are, often quietly, building vehicles which have cash flow profiles similar to asset backed securities. The economy structurally wants those assets and capita for them is extremely abundant.
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*adds to Summit pitch deck*
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Why would they securitize part of their business when they could just issue bonds? I believe you're right about more debt offerings, but it's hard to securitize service contracts.
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There wouldn’t be a reason to securitize saas cash flows, they can just issue debt at a relatively low interest rate and pass the incremental return to equity holders. Borrow at 5%, return 15%. 10% incremental return to shareholders
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The only reason would be if they were providing business financing to the people who were using their software as a service. For instance maybe a franchise model where the franchise owner needs financing to ramp up and rents the software and also pays back the 1/2
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Is the thesis, the asset backed securities will undercut the traditional VC model when it comes to access to capital?
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Traditional invoice discounting by banks for reliable customers activates this even today. Raising >$ than contracted cash flow through securitization is crowdfunding in other words.
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Hello, the unroll you asked for: Thread by
@patio11: I think it is underappreciated by many technologists how many technology companies are, often… https://threadreaderapp.com/thread/1223102363403112450.html …. Share this if you think it's interesting.
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And we know what happened to the mortgage-backed securities market!
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Amazing
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